Class Action Alleges Fiat Chrysler Sent Deficient, Misleading COBRA Election Forms

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A proposed class action claims FCA US, LLC—Fiat Chrysler—failed to provide proper notice of continued healthcare coverage to employees who experienced a qualifying event.

The automaker’s COBRA notice was not written, as required by law, “in a manner calculated to be understood by the average plan participant” in that it included unnecessary threats of fines and penalties and incomplete and conflicting information regarding the form deadline and plan administrator, the 18-page case alleges.

Per the complaint, FCA’s COBRA election form had the effect of discouraging plan participants and beneficiaries from electing coverage rather than facilitating their ability to maintain health insurance as required by law.

According to the lawsuit, the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) mandates that the plan sponsor of certain group health plans, including the healthcare benefits plan administered by Fiat Chrysler, provide each qualified beneficiary who would lose coverage as a result of a qualifying event, such as termination, with notice of their right to elect to continue coverage under the plan. Although the U.S. Department of Labor has issued a model COBRA Continuation Coverage Election Notice to help plan administrators comply with the law’s requirements, the defendant allegedly refused to use the model form and left out material information.

“Rather than use the Model Notice, Defendant deliberately authored and disseminated a notice which omitted critical information required by law and needlessly included language meant to deter and otherwise ‘chill’ election of COBRA benefits,” the complaint alleges.

According to the case, FCA’s election notice contained conflicting information with regard to the time period and deadline by which COBRA election must be made and failed to disclose the name, address and telephone number of the plan administrator.

Moreover, the defendant’s COBRA election form included threats of criminal penalties and IRS fines that “simply have no place in a COBRA election notice,” the suit argues. The notice stated that filling out “false, misleading” or even incomplete information could result in criminal or civil penalties and “needlessly” referenced a $50 IRS fine for each failure to provide an accurate tax identification number for a covered individual, the case claims.

“Threats of criminal penalties and IRS fines simply have no place in a COBRA election notice, a process which is supposed to facilitate COBRA coverage election rather than intimidating people into not electing coverage,” the complaint asserts.

Per the lawsuit, the missing critical information and additional unnecessary information had the effect of confusing health plan participants such as the plaintiff.

The plaintiff, who was terminated in January 2019 after working for Chrysler for 26 years, says he was discouraged from opting for COBRA coverage after reading the defendant’s “conflicting, inadequate, and misleading” election form. As a result, the plaintiff lost health coverage for himself, his wife and two young children and was forced to pay out of pocket for medical expenses, according to the lawsuit.

The case looks to cover all participants and beneficiaries in FCA’s health plan who were sent the COBRA notice in the same form in which it was sent to the plaintiff during the applicable statute of limitations period as a result of a qualifying event, and who did not elect COBRA coverage.

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